ACA FORWARDING LIMITED

Risk Rating: LOW

Justification: Despite a significant negative reserve, the company demonstrates strong liquidity, consistent growth in net assets and shareholders' funds, and no filing or governance issues. The negative reserve appears to be a technical accounting item rather than an indicator of underlying financial distress.

Key Concerns:

1. Large Negative Other Reserves: The balance sheet shows "Other reserves" of -£1,004,936. This is a substantial negative figure that reduces total shareholders' funds. Without a note explaining its origin (e.g., a prior-year restatement, a revaluation deficit, or a capital reduction), the true economic health of the company is partially obscured. This requires immediate clarification.

2. Director Loan Receivable: The accounts state that a director was advanced £38,282 during the year on an interest-free, repayable-on-demand basis. While the amount is not material relative to the company's size, the lack of stated repayment terms and the fact that it remained outstanding at the balance sheet date represent a minor governance concern and a potential, albeit small, cash flow distraction.

3. Discrepancy in Share Capital: The balance sheet shows "Called up share capital" of £37, while the company overview data records share capital of £100. This minor discrepancy is likely due to rounding or a share buyback/cancellation, but it warrants a brief check against the company's register to ensure consistency.

Positive Indicators:

1. Strong Liquidity and Working Capital: The company holds £2,120,895 in cash against current liabilities of £1,665,430, providing a robust cash buffer. Net current assets (working capital) stand at a healthy £2,489,549, indicating excellent short-term financial health.

2. Consistent Profitability and Growth: Shareholders' funds (equity) have grown consistently from £166,756 in 2016 to £2,489,795 in 2025. Retained earnings (accumulated profits) increased by over £535,000 in the latest year alone, demonstrating strong and sustained profitability.

3. No Debt or Solvency Issues: The company has no long-term debt on its balance sheet. Its current liabilities are easily covered by cash alone, and net assets are positive and growing. All statutory filings are up to date.

Due Diligence Notes:

• Clarify the Nature of "Other Reserves": The most critical item to investigate is the nature and source of the -£1,004,936 in "Other reserves." Request the full set of accounts or a management explanation to confirm it is a non-cash, technical accounting entry (e.g., a prior-year adjustment or a revaluation reserve) that does not impact cash flow or operational solvency.
• Confirm Director Loan Terms: Verify the terms of the director loan. While small, confirm it is compliant with company law and the company's articles of association, and understand the repayment plan.
• Reconcile Share Capital: Confirm the current issued share capital figure with the company's statutory register to reconcile the £37 vs £100 difference.

Executive Summary